The bank credit to micro, small and medium enterprises (MSMEs) has improved and is currently at 19.3 per cent year-on-year (YoY) in January 2024. Ealier it was 15.1 per cent of total non-food credit, according to the Jocata Sumpoorn Index.
The index remained stable at 0.57 in January and fluctuated within the range of 0.53 to 0.62 throughout the calendar year 2023, compared to a range of 0.56 to 0.73 in 2022. This year has commenced with the index indicating a slight uptick in the sales activity of small businesses.
The second advance estimate put gross value added (GVA) at constant prices growing at 6.9 per cent for the full year, with the first three quarters estimated at 8.2, 7.7 and 6.5 per cent respectively. “This implies that the January to March quarter will have growth at 5.4 per cent,” it added.
There are significant causes of concern in the national income estimates that also have an impact on MSME growth. The first is the continued slowdown in private final consumption expenditure (PFCE) which forms a large part of the demand for output from small businesses.
PFCE, which forms the largest component of gross domestic product (GDP) is estimated to account for 55.6 per cent of GDP, which is the lowest share since 2010-11.
More importantly, the growth in PFCE in 2023-24 has been revised downwards from 4.4 per cent in the first advance estimates in January to 3.02 per cent in the second advance estimates.
Barring the year of the pandemic when PFCE contracted due to the impact of the Covid-19 restrictions, this growth is the slowest since 2002-03,” according to the index.
